Main Street v. Wall Street on ESG
BY PGF
1 year, 6 months ago
The headline is from this article. A better one would be the Reality of Real Profits v. Marxist Ideology Taking Over Wall Street.
The reality is real profits after expenses are what matters, or a business isn’t a going concern. A company must cover production costs, including salaries, and have some cash left (8 to 10 percent is the average target for an S&P 500 company) to reinvest for growth, new products, or expansion into new markets. You can’t structure a business around theoretical returns in feel-good social engineering.
In recent weeks there have been giant strides in the effort to challenge the legality of the “Environmental, Social and Governance” (ESG) construct that has become a threatening obsession of the titans of Wall Street. Though ESG remains a unfamiliar acronym for most Americans, Main Street investors whose pension dollars are funding ESG investments are beginning to ask questions.
ESG is a social construct. The Left always projects.
While constituting competing frameworks, reporting systems, and scoring systems for environmental and social reporting for companies, the ESG construct lacks any quantifiable or worthwhile measurements. Put plainly, it is an entirely subjective scheme, created and funded by political, activists. Under the pretense of environmental protection and social diversity, these activists recognized that they had allies in the financial services and banking sectors who could be incentivized to do via the capital markets that which the activists knew they could never achieve using traditional market forces or democratic institutions. In short, voters would never agree to ruin their own economies, livelihoods and futures in the name of political ideology. To be successful, it necessarily needed to be stealthy and unchallenged.
And neither would shareholders vote to destroy real profits for green projects that have no chance of recouping investment costs, knowing that these schemes don’t make actual profits in free and open markets. By ‘traditional market forces,’ the article means, earn real money or die!
In recent travels, giant windmills stood throughout certain parts of the US west. Where is the study on ROI (Return on investment) for these hideously ugly and mostly idle steel versions of the Dutch windmills from the Middle Ages? Forget for the moment monetary ROI; the Left doesn’t care about that. Let’s talk about Kilowatt Hours of ROI. What is the breakeven for a windmill in terms of energy used to produce it vs. energy output over its installed productive years?
The things are gigantic, made from metals, with miles of wiring for each one, lubrication, transportation and installation, lifecycle maintenance, etc. At what point, having poured millions of kilowatt hours of carbon energy into its production, does a windmill pay for itself in carbon savings by kilowatt hours of energy output? We all know the answer; they take more to produce and maintain in the total lifecycle than they will ever deliver. We’re willing to be wrong about this; dear communist greenies, show us the math, please?
Therefore, if one doesn’t pay for itself in kilowatt hours of power produced, it can never pay for itself in real money!
That’s just one example under the E for Environmental. This is why the Green Energy New Deal is fake. Remember that to implement their Green New Deal completely, they’ll need you to suffer to the point where you’ll accept whatever they plan to implement if only you have enough food for your children. The S for Social is most assuredly destructive to capital investing. But we’re ranting, back to the article.
Recognizing this reality, attorneys general Jeff Landry and Todd Rokita of Louisiana and Indiana issued a letter earlier this month warning their states’ pension boards that ESG investing is likely a violation of fiduciary duty and potentially opens their investment staff and investment advisers to liability if they continue allocating funds to ESG-promoting asset managers such as BlackRock.
The Landry and Rokita letters follow another letter sent last month from them and seventeen other state AGs to BlackRock CEO Larry Fink. That letter warns the asset management giant that BlackRock’s ESG investment policies appear to involve what they describe as, “rampant violations” of the sole interest rule, a well-established legal principle. The sole interest rule requires investment fiduciaries like BlackRock, to act to maximize financial returns, not to promote social or political objectives.
Yet, it is clear that BlackRock and industry counterparts are doing precisely that. They are attempting to use the ESG pretext of “protecting the environment” to re-orient trillions of dollars of their clients’ capital toward what are unquestionably their own political and social objectives. This effort is borne out in the companies in which they invest and the trends they curate and then fund. As is repeatedly touted in the literature of the most prolific ESG advocates, they believe that because their asset management partners, including BlackRock, manage such a substantial percentage of the total investment market, their ESG world view is above constraint of law, or beyond the reach of the institutions that have traditionally protected investors from dubious investment schemes.
Dubious is the exact right word. One might be able to make a contrarian investment in the E, but the S and G exist enforced by law under the runaway woke interpretations of the 13th amendment and 1964 Civil Rights Act. It’s not just the most prominent corporations that are involved. Every medium or small (publicly traded in stock) corporation has to sign on to the woke S and G or get shut down by government enforcement. Meanwhile, because of the E, nobody can get funding for projects that make much-needed electricity, such as new nuclear power or natural gas plants.
America is famous for wealth extraction and not just overseas. It’s what government and businesses have been doing to West Virginia through coal for decades. The coal leaves on a train to make power for the big cities, and with it goes the profits leaving one of the most mineral-rich states in the union in poverty. Now, much of that coal goes to our self-declared enemy, China. The Left plans this same thing for Texas, Oklahoma, Wyoming, North Dakota, Louisiana, and others by destroying the oil industry.
But don’t worry, they’ll take your tax money and put up a windmill, if perchance a breeze comes along, maybe you can have an hour of electricity. I was struck by the fact that there are no substations on large farms with 50 giant windmills or more. Every coal, hydroelectric, and nuclear plant that I’ve seen has electrical substations to concentrate and route the gathered electricity on high-tension wires to population centers. I’ve even seen a solar farm with a small substation. Maybe the windmills are magic?
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On September 30, 2022 at 5:21 am, Joe Blow said:
ESG is a total scam.
Heres a sime litmus test I do on myself 6,000x per day: certain people and groups in this world are not just in opposition to my views, but are generally held up as completely contemptable, dangerous, and generally loathsome to the point you wouldn’t piss on their face if it was on fire. I’m talking about people with names that rhyme with boros, blinton, melosi, ferry, etc
You know who you are….
If an issue is presented before me, any issue – sky is blue, and some/one/all of those people are on one side of said issue (yes, the sky is blue says peorge boros and his buddy shillary blinton), I will unerringly choose the opposite.
It doesn’t matter the issue, if these people want or support it, I am against it. It might even actually be good for me! But I don’t care… solves a lot of hard questions for me without having to do a lick of actual research. YMMV…
On September 30, 2022 at 10:14 am, Don't mind me said:
You don’t need to talk about the small details with wind or solar technologies.
All you need to know is that a solar panel or wind turbine will never produce more energy than what was used to produce it in the first place.
Instead of dotting the landscape with follies, we should be focusing on real advances in energy production using technologies that actually produce more than they consume.
On September 30, 2022 at 1:25 pm, Georgiaboy61 said:
@ PGF
Re: “The reality is real profits after expenses are what matters, or a business isn’t a going concern. A company must cover production costs, including salaries, and have some cash left (8 to 10 percent is the average target for an S&P 500 company) to reinvest for growth, new products, or expansion into new markets. You can’t structure a business around theoretical returns in feel-good social engineering.”
That’s a good one-paragraph summary of why communism – even disguised as doing good works for the world – doesn’t work and can’t work. Or, as Margaret Thatcher used to say, “The trouble with socialism is that sooner or later you run out of other people’s money.” Socialism, communism, progressivism, whatever you term it – destroys the incentive to work and drains the vital surplus productivity from the economy needed for genuine economic vitality and prosperity.
In a communist country, the workers are paid the same whether their products are any good or not. If memory serves, it was the late economist Milton Friedman who toured the old USSR and saw, to his amazement, a shoe factory making shoes only for one foot. The economist asked a worker about it and he replied that they would keep making them until they were told to stop and and switch to making shoes for the other foot!
Which brings to mind another quip from the old Soviet Union, “We pretend to work, and they pretend to pay us!”
ESG is just another racket cooked up by the so-called ruling class elites. Don’t buy any of it at face value. As with pretty much everything else they do, enhancing their money, power and prestige are their real goals, not the betterment of humanity or the world in which we live. Just another scam for funneling wealth into their already lavish bank accounts.
As for “green energy,” another one of their pet grifts, it is only in the ascent in the U.S. and the West at the moment because of massive government and other external subsidies – which serve to hide the fact that these boondoggles are expensive failures which generate scant energy at sporadic and difficult-to-predict intervals and blight the landscape as well.
The only people who make out OK in this are – surprise, surprise! – friends of the Bidens and that crowd. To them, “green energy” is just another convenient way to launder taxpayer’s money before absconding with it, and it also makes a nice tax write-off when the time comes. They’ll privatize the gains (profits) and socialize the losses (debts) as they always do. And this license to steal will continue until someone or something stops it.
“Green energy” is also part of an elaborate bait-and-switch. The ruling class know full-well that only fossil fuels are a reliable source of energy in today’s world. While they palm off wind, solar and other not-yet-mature technologies onto the unsuspecting consumer, they’ll work to control as much of the fossil fuels supply as they can. Belatedly, Joe and Jane Sixpack will wake up to the fact that they have been had, but by then, the architects of this scam will have fled to safe havens with low tax rates and no extradition to the U.S.
On September 30, 2022 at 7:52 pm, PGF said:
@GB61, that’s exactly right, without the subsidies from government no company would start a green energy project. The people running the major energy concerns aren’t eating crayons, and wondering what what works both at generating power and for making money. Because if your energy company doesn’t generate energy, it’s not in energy nor is it an actual company.
On September 30, 2022 at 11:47 pm, Georgiaboy61 said:
@ PGF
The other way you know the whole climate change and green movement is a scam, is by the behavior of the so-called “elites” themselves. While they lecture the hoi-poi and the great unwashed about the crisis unfolding around us and how “everyone will have to make sacrifices” to save Mother Earth, they are jetting around in their private jets, living in homes with a carbon footprint the size of a small country, and cruising around in yachts that are the size of WWII-era destroyers. That is, when they aren’t eating fillet mignon and drinking the best booze in their penthouses and mansions….
In other words, as law professor (of “Instapundit” fame) Glenn Reynolds has stated, he will believe that it is a crisis when the ruling class starts to act like it.